Australia's 2026-27 Budget Expands Foreign Investor CGT and Adopts OECD Pillar Two Tax Rules

Amy Liu

12d ago· 6 min readenInsight

finance business tax policy international taxation

Summary

Australia's 2026-27 federal budget introduces two major tax measures: broadening the foreign resident capital gains tax (CGT) regime and adopting the OECD's Pillar Two "side-by-side" package into global and domestic minimum tax rules. Both measures carry retrospective elements and significant compliance obligations, requiring foreign investors and multinationals to reassess their structures and documentation. The article provides detailed analysis of the CGT changes (including the removal of the "principal asset test" threshold and expansion of taxable assets) and the Pillar Two implementation (including the income inclusion rule, undertaxed profits rule, and domestic minimum tax), along with practical recommendations for affected entities.

Source

bskyAustralia's 2026-27 Budget Expands Foreign Investor CGT and Adopts OECD Pillar Two Tax Rulesnews.bloombergtax.com

Key quotes

· 3 pulled

The budget proposal confirmed that the government will amend global and domestic minimum tax laws to implement the OECD

These groups should reassess their structures and documentation as both measures carry retrospective elements and meaningful compliance obligations.

Australia's 2026-27 federal budget confirms that the government seeks to broaden the foreign resident capital gains tax regime and adopt the OECD's 'side-by-side' package

Snippet from the RSS feed

Opinion: Australia's budget measures to broaden the foreign resident capital gains tax system and adopt the Pillar Two "side by side" package carry retrospective elements and compliance obligations that warrant immediate preparation.

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